Saturday, April 30, 2016

PM dirests to increase development spending

Prime Minister Khadga Prasad Sharma Oli has directed government secretaries to spend 80 per cent of the budget in next two-and-a-half months.
Addressing an interaction with the secretaries at his Office in Singh Durbar, on 'Progress and challenges on the current budget' today, Oli directed them to anyhow spend 80 per cent of the development budget within next two months. The fiscal year is only two-and-a-half month remaining but the government has been able to spend only 19.69 per cent or Rs 40.50 billion till April 28. The eroding spending capacity of the government has taken toll on development projects, though the ministries have been asking for more budget for the next fiscal year.
The premier also asked the secretaries reason why the spending has been only 18 per cent by the mid-April, by the end of nine months of the current fiscal year.
Though the secretaries said that last year's earthquake, economic blockade and obstruction in project implementation process delayed the developmental projects and expenditure, they have not been in position to accelerate the development works in the last months of the fiscal year.
Going by the trend of the spending in the last fiscal years too, the successive governments have been spending most of the budget at the last trimester, also due to procedural dilemma and bureaucratic hassles.
The fiscal year is ending in next 75 days but the government still has Rs 168 billion development budget remaining, which means the government has to spend around an average of Rs 2.24 billion per day. However, haphazard spending at the end of fiscal year is dangerous as the quality of the development works could be compromised and no one will be accountable to the money that is people's tax.
The Office of the Auditor General has reported that some 328.52 billion arrears till the last fiscal year 2014-15, which means the misuse of public money is increasing and the government is not being accountable to the people and public spending. A tendency to allocate budget to politically motivated projects in the last quarter of the fiscal year to accelerate spending is also a serious concern for the auditor general.
On one hand the government is tightening the screw to mobilise revenue and on the other, it has been unable to spend, which means the government treasury is bulging, stashing the money unproductively in the central bank's vault. Due to failure to spend, the government treasury is stashed with Rs 170 billion – which is the highest over last four-five years – according to central bank.
During the meeting, most of the secretaries said that their ministries could spend capital budget in the range of 60 per cent to 70 per cent, according to a secretary present at the meeting. “The Finance Ministry has projected the capital expenditure of 75 per cent in the current fiscal year,” he said, adding that most of the secretaries were of the view that most of the spending takes places in the last four months and payment of expenditure made in first and second four months also take place at the same time, hence expenditure figure will grow.
Mid-Term budgetary review of the current fiscal year had mentioned that over the last seven years, the trend has it that over 70 per cent of actual capital expenditure takes place in the last four months. “This trend is likely to continue this year too.”
"The prime minister took stock of the progress made so far on capital expenditure and directed all the concerned ministries to speed up works and utilise the capital budget in an effective manner within the remaining two-and-half months of this fiscal year,” said spokesperson of the Office of Prime Minister and Council of Ministers Binod Bahadur Kunwar.
Many secretaries assured the prime minister that use of 80 per cent to 85 per cent of capital expenditure was still possible, if the works move ahead as planned.
However, former chief secretary Leela Mani Paudyal said that it’s almost impossible to achieve 80 per cent capital expenditure within the next two-and-half months. He argued that the expenditure ratio could however dramatically increase, if the government disbursed the private housing subsidy to those whose residences collapsed or were damaged by last year’s quake.
The government has plans to provide Rs 200,000 as private housing subsidy to each family. But it has not given even the first of four installments of this support to the victims.
"Expressing concern about low capital expenditure so far, the prime minister instructed the secretaries to speed up road, bridge and electricity project works,” said energy secretary Suman Prasad Sharma, who claimed that his ministry will spend up to 80 per cent of the capital budget. But Energy Ministry has so far spent only 28 per cent of the capital budget
Likewise, Ministry of Agriculture has so far spent just 30 per cent capital budget. But agriculture secretary Uttam Kumar Bhattarai claimed that the ministry has targeted to spend 80 per cent capital budget by the end of fiscal year.